How Digital Nomads Went From Niche to Normal

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As companies tighten their purse strings, they’re spreading out their hires—this year, and for years to come.

When GitHub launched in 2008 as a digital repository of code for programmers, its handful of employees communicated mostly through instant messenger. There was no office. “Chat was our office,” GitHub founder and former CEO Tom Preston-Werner said in a 2013 interview with PandoDaily. In the beginning, GitHub’s team of remote employees was a cost-cutting strategy. Over time, however, Preston-Werner began to see the setup as a tactical advantage. Hiring from everywhere allowed GitHub to recruit beyond the narrow swatch of talent congregating in Silicon Valley—a geographically diverse group that, naturally, had a global scale. “[It] forced us into this distributed mentality,” he said in that 2013 interview.

Three years later, GitHub is considered a leader in the space of distributed work. Although GitHub is headquartered in San Francisco, the company’s roughly 600 employees are dispersed: 44 percent are based in the Bay Area, 35 percent are scattered around the US, and 20 percent are located internationally. (Of course, distributed workers or not, GitHub recently laid off about 5 percent of its staff, or 30 people, in a bid to focus on enterprise sales, as Fortune reported last week.) By allowing its engineers and employees the flexibility to work from around the US and the world, GitHub’s setup has turned out to be a precursor to a movement.

As the US economy becomes increasingly globalized, expect tech startups and larger companies to hire overseas at a faster rate. There is a host of tech companies with distributed workforces, such as Wordpress, Basecamp, and Genuitec, along with GitHub. This is a trend that, according to executives and other experts, will continue to grow in the upcoming years — especially as technology continues to provide more resources for employees to communicate easily with headquarters.

It’s a bold prediction, but there are signs aplenty: Investors are tightening their purse strings and startups are beginning to feel the crunch. As the Wall Street Journal noted earlier this year, many expect the situation to get worse. So to build a business, startup founders are getting creative. Cutting your overhead — and getting more talent for your money — by letting people work from wherever they want? That’s just a smart money move.

Data backs this up. The number of workers who telecommute across industries rose 5.6 percent between 2013 and 2014 from 3.4 million to 3.6 million workers, according to Global Workplace Analytics, a San Diego-based research firm. Notably, that’s up from just 1.8 million employees in 2005, meaning the number has doubled in less than a decade. And the typical telecommuter isn’t necessarily a scrappy 20-something techie, either, the firm insists: According to its stats, the average telecommuter is college educated, 49, and earns a salary of $58,000. Three quarters of remote workers earn more than $65,000 per year, placing them in the 80th percentile of all workers—including those that work in offices.

It wasn’t always like this. Just a few years ago, many business leaders frowned on remote workers, believing that spread-out employees chipped away at any kind of collective morale. Take Marissa Mayer, CEO of Yahoo and one of the most high-profile critics of telecommuting. In 2013, she infamously banned her employees from working from home. The move was met with criticism, prompting her to defend the decision as company-specific in an interview with Fortune: “[Remote work] is not what’s right for Yahoo right now,” she told the magazine. “It was wrongly perceived as an industry narrative.”

But things have changed, especially in 2016. “I think there’s a new view that distributed teams are a clever hack and that startups have an advantage in hiring really great talent at a lower cost,” says Megan Quinn, a general partner at VC firm Spark Capital. She regularly works with companies who aren’t finding the right employees in the scramble for talent in California. Instead, they’re “tapping into great talent in Canada, have an amazing customer service team in Arizona, and a sales force in Austin,” she continues. “That’s now considered an asset.”

Take Anne McCarthy, an engineer at web development company Automattic, which powers the Wordpress blogging platform. After graduating from UNC Chapel Hill in 2014, McCarthy started as an employee on Automattic’s distributed team. The company trumpets its spread-out employees: “We’re a distributed company with 514 Automatticians in 52 countries speaking 70 different languages.”

But McCarthy’s use of the setup allows her to live out her wanderlust. She eschews co-working spaces for Airbnbs, though the wifi can be spotty. And her international team of coworkers has given her knowledge of life in Greece and Buenos Aires. McCarthy also believes her remote status serves Automattic: The company has workers on the ground in different neighborhoods, hearing the needs of their specific communities. That naturally makes a workplace more diverse, she argues, compared to one that limits their employees to a “self-selecting pool” from a single area.

Julio Avalos, GitHub’s Chief Business Officer, agreed, explaining that when you recruit from a single geography you often find yourself with an “echo chamber” of talent—employees with similar viewpoints. “From a talent perspective and a diversity perspective, you limit that and it limits the product,” he says. “In order to serve the needs of multinational customers, companies need to look at their workforces multinationally as well.”

But no one says structuring a business like this is easy to implement — or maintain. In my conversations with companies using the distributed setup, including GitHub, Mozilla, and Automattic, managers cited a host of challenges, including communication issues, isolated employees, and inefficiency. Overcoming distance requires a separate infrastructure to combat geographic diversity.

For GitHub, that means relying on online chat and email (as in its early days) to ensure that workers outside the SF headquarters feel connected to the team. It also means building out its own software platform to ensure easy access to knowledge. For instance, GitHub employees can opt into a virtual map to see where and when people are working globally—a kind of digital version of the office map. Quinn says the boom in technology has helped improve remote connections, though there’s still a ways to go. “We do not have the perfect video conferencing system,” Quinn says of the current slate of tools available for startups thinking of distributing their employees. Instead, she supports an audacious prediction for what could be the new tech to make distributed teams’ lives even easier: “That could be VR.”

If technologies are implemented poorly from the beginning — or left out entirely — teams can suffer, as communication and productivity falter. That’s a point emphasized by David Slater, Mozilla’s SVP of Operations and Chief of Staff. Mozilla has a distributed workforce which arose organically from its volunteer-based business model. The company employs 1,100 workers spread out among 24 different countries and has 43 percent of its paid staff working remotely. That’s in addition to “tens of thousands” of volunteers who work across the globe. That means that volunteers work alongside employed staff to lend their skills, from coding to holding community events.

The company offers resources to help staff overseas fit in culturally. For instance, Mozilla gives every single employee a travel budget in order to see others in person. (Slater calls the experience “critical” to ensuring corporate culture.) There’s also an all-hands meeting that includes employees and a “significant portion” of volunteers in order to help foster relationships between Mozilla’s employees. “A really important aspect is to write things down,” Slater says. This can take the form of employees posting online to share knowledge with one another. “The wiki becomes the water cooler,” he says.

Yet as nice as it is to have the benefits of working from home, what happens to job security when remote work becomes longterm? As Backchannel reported in March, things aren’t always rosy. At Lyft, for example, customer service jobs have been outsourced to less expensive parts of the country, including Nashville. Those workers have received increasingly fewer opportunities for advancement, or even stock options. In short, they were considered expendable.

The hope is that companies that are truly distributed—where managers and skilled labor work alongside entry level and support workers from the comfort of internet cafes in the US and abroad—can ensure growth across the board. That would allow us to bear witness to a tech boom, truly unlimited by the confines of the Bay Area.